Canada Pacific buys a large American company

The Canadian Pacific has signed an agreement to acquire Kansas City Southern, a major U.S. competitor, with the potential goal of building a network connecting Canada, the United States and Mexico.

The two companies announced Sunday that the Canadian company will acquire Kansas City Square for about $ 25 billion (C $ 31 billion).

Under the deal, the U.S. company will have a share value of $ 275, a 23 percent premium over Friday’s closing price.

Kansas City South shareholders will receive 0.489 Canadian Pacific Railway shares and US $ 90 per share.

The transaction must be approved by US authorities. The study is expected to be completed by mid-2022.

According to the two companies, this will allow them to build the first rail network connecting the three countries of North America.

Keith Grill, Canadian Pacific leader and CEO, said the transaction will bring transformation to North America, while at the same time bringing significant positive benefits to employees, customers, communities and partners of both companies.

It will also enable the integration of the supply chains of a priority continent, which has been essential since the signing of the Free Trade Agreement between the three countries.

According to a press release, the newly merged company will operate on more than 32,100 km of track and will generate approximately US $ 8.7 billion in revenue based on 2020 data.

The two networks meet in Kansas City. The new company will operate across Canada, the US Midwest, Northeast and South-Central America and Mexico.

Company in this article: (TSX: CP, NYSE: CP, NYSE: KSU)